404 Lesson 2

Accounting 404
Lesson 2 Assignment: Cost Behavior
As the FallSafe Parachute Factory continues to set goals for expansion, the company needs a more accurate history of their total costs and cost behaviors over the past few months. Unfortunately, they have never relied heavily on Managerial Accounting before now, so there are large gaps of missing information that need to be calculated in order to move forward.
Directions: Each question of this assignment should be prepared as a separate sheet in one Excel file. Please change the sheet names at the bottom of the page to the question number. Then, follow the directions for each question below. Be sure to show your calculations and label your work for full credit. This assignment is worth 50 points. The grading rubric may be previewed in the Cost Behavior Drop Box.

Question 1
FallSafe began production in late 2012. The information available for October, November, and December of that year is listed below. Using the fixed and variable cost behavior formulas discussed in the Lesson 2 commentary, calculate the missing numbers.

2012 FallSafe Cost Behavior
Month
October
November
December
Number of Units Produced
2,000
2,500
3,000
Variable Costs
20,000
(e)
(k)
Fixed Costs
50,000
62,500
(l)
Total Costs
70,000
(g)
(m)
Variable Cost Per Unit
10
(h)
(n)
Fixed Cost Per Unit
25
25
25
Total Cost Per Unit
35
(j)
(p)

Question 2
Calculate this problem on sheet 2 of your Excel document. Using the High-Low Method, compute the variable cost per unit and the total fixed costs of the following FallSafe information from the preceding six months:
Month
Units Produced
Total Costs
January
3,000

$104,000
February
5,000

$125,000
March
2,500

$100,000
April
4,000

$113,500
May
4,500

$118,000
June
4,750

$122,000

Question 3
On sheet 3 of your Excel document, prepare a regression analysis based on the following FallSafe information from the